Subdued market recovery over past five months

Regardless of politics, the property market’s recovery is still subdued.

Friday, October 20th 2023

Although some real estate agents say they have seen a noticeable uptick in the number of people wanting to buy, CoreLogic says the total is still relatively low by normal standards.

In its latest Housing Chart Pack, CoreLogic says sales have increased for five months in a row and measured across agent-led and private transactions, September’s figure was up by about 8% from a year ago.

“It does now appear we’ve entered the next phase of the housing cycle,” Kelvin Davidson, CoreLogic’s senior property economist says.

CoreLogic’s House Price Index suggests average property values bottomed out at a national level in September, after about 18 months of falls. “But that flat national figure reflects continued falls in some areas offset by modest growth in values elsewhere, such as in Auckland and Wellington,” Davidson says.

Part of the reason for the falls in values coming to an end is the listings situation – continued subdued flows of new listings, but rising sales volumes, meaning that the stock of listings on the market has dropped.

Davidson says he is not convinced National’s “property-friendly” policies as they’re slowly introduced, in some shape or form, will radically transform the subdued recovery. “Affordability is still a problem, mortgage rates won’t fall anytime soon, and debt-to-income ratio caps are still on the cards for next year.

Buyer percentages

First home buyers (FHBs) remain a strong presence in the property market, with a 27% share of purchases over Q3 as a whole – including a record monthly figure of 27.6% in September itself.

They are enjoying lower house prices, less competition from other buyer groups, and also some other supports – such as KiwiSaver for the deposit and access to low-deposit finance via the LVR speed limits.

However, relocating owner-occupiers are relatively quiet compared to normal, with just 26% of purchases over the third quarter of this year. 

Investors also remain quieter than normal, at 21% of activity. They’re being restrained by the required 35% deposits, low rental yields, and lack of mortgage interest deductibility. It’ll be intriguing to see how they perform in the coming months after a change of government and ‘property friendly’ policies


Rental growth is starting to run at historically high levels, reaching more than 7% annually on both the Stats NZ and MBIE measures lately. That reflects further growth in wages, but also a tightening supply and demand balance – driven in particular by soaring net migration. Wellington and Dunedin have been slower to grow in terms of rents, but Christchurch, Hamilton, and Auckland have accelerated.

Gross rental yields nationally have edged back up to 3.2% – from a trough of 2.6% for much of last  year – the highest level since late 2020. However, that’s still relatively low by past standards, and is less than the income returns on some other asset classes (e.g. term deposits). Auckland yields remain the lowest of the main centres, although Wellington is also sub-3%.


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